Opinion

W(h) ither European shale oil and gas?

Posted by David Bamford

19-Dec-2016

petromall.org


The US experience with shale oil and shale gas offers a number of lessons to the rest of the world. Lessons that suggest, amongst other things, that UK onshore unconventionals will be tough to deliver.

Lesson #1 seems to be that the best ‘candidate shales' are those that have acted as the source rock for a significant, even major, conventional petroleum province. In fact it is very rare that this is not the case.

If we look in our ‘neighborhood' – Western Europe, Russia and the FSU, and North Africa – the obvious candidates therefore appear to be the Kimmeridge Clay, the Bazenhov, the Domanik, and the ‘hot shale' of North Africa,

Lesson #2 is that the economics work best (or at current oil prices, only work) when you are in the “sweet spot”. The “sweet spots” of plays such as the Barnet, the Bakken, some of the Permian Basin are now clear, after much effort.

Lesson #3 is that once you are in a “sweet spot”, technology can drive costs/barrel or costs/mcf way, way down. And IRRs way up.

An important question therefore is – can “sweet spots” be identified in advance, before major effort is put in, big $s are spent?

It seems to me that the jury is still out on that question! No doubt our US colleagues will figure their answer out as they move into other basins.

But for us in this neighborhood, what does this mean for a “shale gale” here, or hereabouts? Perhaps that onshore UK is not the first place you would think of to start a shale oil or shale gas business??


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